Google, Viacom settle suit over YouTube

Costly battle over YouTube and copyrights

Ellen Huet

Updated 6:51 am, Wednesday, March 19, 2014

Veoh could have been a contender.

In 2006, the fledgling video-hosting company was poised to become another YouTube, until it faced several lawsuits alleging content uploaded by its users violated copyright laws. Veoh eventually won the cases, but the legal battle of attrition lasted four years and sucked the lifeblood out of the company. It filed for bankruptcy in 2010.

Veoh's tale is what worries analysts in light of Google and Viacom's settlement on Tuesday of their seven-year, $1 billion lawsuit over copyright infringement on YouTube. The courts consistently ruled in Google's favor, and no money changed hands in the settlement, a source told Reuters. Details of the settlement were not disclosed.

But even though the search giant had the upper hand, the suit was costly: Google said in 2010 it had already spent $100 million on the case.

"Who else has the money that Google has? Nobody - not even God," Goldman said.

Both YouTube and Veoh appealed copyright complaints from content creators - Viacom and Universal Music Group, respectively - by saying they were "safe harbors" under the Digital Millennium Copyright Act. Under that law, platforms that allow user-uploaded content are not responsible for instances of copyright infringement so long as they allow rights holders to block their content if they choose.

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The settlement is good news for Google and YouTube, according to Goldman. The endgame for Viacom - the corporate umbrella over networks including Paramount, Nickelodeon, MTV and Comedy Central - wasn't to win damages, but to control who's allowed to play, he said.

"It's about draining the resources to cause a company to exit the industry," Goldman said. "It's a way for the rights owners to retain control over who they consider industry participants. They have finally decided to accept YouTube" - millions of dollars in lawyers' fees later.

"If you want to build a new video-hosting platform, you have to put aside millions for litigation costs," he said. "We aren't likely to see a replacement emerge for YouTube nearly as quickly."

While the lawsuit dragged on, YouTube and rights owners found less litigious ways of coexisting. Viacom clearly sees benefits from having its content easily accessible on YouTube: Paramount struck a deal to put some content on the platform, and other agreements allow rights owners and the platform to share revenues from ads that run before videos.

A major part of these growing agreements is YouTube's ContentID, a feature that scans YouTube content and compares it against known copyrighted content to flag possible cases of infringement. Rights owners are then allowed to decide whether to ask that the content be removed, allow it to stay and profit from ads.

"They (Viacom) see it as a useful way to monetize their content," said Julie Ahrens, director of copyright and fair use at Stanford University's Center for Internet and Society. "They don't control every copy of songs, movies or clips that get put up on YouTube, but if a user puts it up, they can say, 'OK, we know it's there and we're OK with it.' "

Ahrens said hosting companies and rights owners still don't agree on the level of responsibility a host site has over preventing copyright infringement.

"One side says Google should do more, and Google responds by saying that's how the law works," Ahrens said. But the "safe harbor" provisions allow host companies to grow.

"Otherwise, the risks to these companies would be way too great and they wouldn't exist," she said. "If YouTube had to start with the idea that if anything on here is infringing, it's going to be sued and be liable for millions and millions of dollars. Nobody would go into that."